As Prime Minister Narendra Modi announced an unprecedented 21-day lockdown of a country of 1.3 billion people, the question most people were asking was probably, “When are things going to start getting better?” Now it looks like the Indian government is finally beginning to take steps to answer that question. In a series of announcements, various stakeholders, including the Finance Minister and the Reserve Bank of India (RBI), have revealed several measures to combat the economic pain caused by the COVID-19 pandemic. While the FM’s economic stimulus has so far focused on the most vulnerable sections of society, businesses have received welcome news in the form of various forms of compliance relief as well as wide-reaching regulatory easing by the RBI. However, India’s trade sector continues to remain concerned, with many commodities like seafood facing acute economic trouble in the coming weeks. Several trade organizations have warned that without specific steps aimed at supporting exporters, Indian trade could be facing a potentially long period of financial crisis. Even as the government clamps down on exports of certain key items such as pharmaceuticals, exporters in other sectors will be waiting for baited breath for some targeted support measures. However, given the RBI governor’s promise to tackle COVID-19 “on a war footing” and the FM’s assurance that more aid will come to sectors as needed, one can hope for some assistance in the coming days. The best advice for now would be to stay indoors, stay safe, and wait out the pandemic -- help is on the way.
Trade Update
28TH MARCH
# 64
Finance Minister Nirmala Sitharaman on 24th March announced a relief package for businesses, easing tax compliance and bankruptcy rules in a bid to help companies and workers cope with the fallout of the coronavirus pandemic. An economic package is also being readied, she said. Sitharaman waived late fee, interest and penalty on delayed tax payments, gave extra time for various statutory compliances and raised the threshold of payment defaults to trigger bankruptcy proceedings from Rs. 1 lakh to Rs. 1 crore.
Indian industry has come up with a 10-point export boost plan for the beleaguered sector amid the lockdown caused by the COVID-19 pandemic. The plan drawn up by the Confederation of Indian Industry (CII) covers everything from extending the 5% interest subvention scheme to all exporters to one-time extensions of customs duty payments and filing bills of entry. “The short-term impact on exports has started showing up with exporters facing liquidity crunch as customers’ payments are not coming through and shipments of ready goods are not able to leave the factory or lying at the port because of lock-down situation globally,” said Chandrajit Banerjee, Director General of CII.
India’s seafood exports could likely miss the $7-billion target this year, as the spread of COVID-19 has adversely impacted demand in many overseas destinations. The country shipped $6.73 billion (Rs. 46,589 crore) worth marine products in 2018-19. “It is now an uncertain market with exports coming to a standstill, which led to a price drop not only for shrimps but also for other fish varieties,” said Alex K Ninan, President of Seafood Exporters Association of India – Kerala region.
A sharp rise in dollar value due to flight of capital into safe assets would be of no benefit to exporters as no exports are taking place in the midst of a global battle against the COVID-19 virus, EEPC India has said. “Our feedback points towards a slow down of shipments with disruption in transport and other trade infrastructure at ports and airports in major markets around the world. Lockdowns in important markets are impacting our operations adversely,” said EEPC India Chairman Ravi Sehgal.
India on 25th March banned exports of anti-malarial drug hydroxychloroquine, which is claimed to be effective in treating COVID-19 patients although clinical trials have not confirmed their efficacy. “The export of hydroxychloroquine and formulations made from hydroxychloroquine are prohibited from immediate effect,” a notification by the commerce ministry said. However, the commerce ministry said exports will be allowed from special economic zones and to fulfill prior obligations or for humanitarian efforts by the government.